What do you actually need to start a startup?
You have a business that you want to get running but, with the freedom of deciding and running your own business ahead of you, it can be a little daunting and even somewhat paralysing.
You might not know where to begin. Thankfully, you’re far from the first person to have gone down this path, and there’s a basic blueprint that you can use to gauge what you need.
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An idea
All good businesses start from an idea. Of course, you need more than just the idea alone, you need to work on that idea.
Once you think of a product or a service that you think there might be a need for, you have to think about what its unique selling proposition is. Are there other products or services on the market like it?
If so, what sets it apart? Do you have a niche that can help you target your own slice of the market, or is there some other way that you’re going to be able to compete with those who are already out there?
A target market (market research)
Even if you do discover that you have zero competitors, at least in the area that you’re planning to operate in, that doesn’t necessarily mean that it’s a great idea to get your business up and running immediately.
The next question should be whether or not the market exists that can support it.
There are market research teams that might be able to help you answer that question, giving you a good idea of the demographics in the market that you’re trying to launch your business in, how much of a demand there might be for products or services like yours, as well as the competitors that you might have to face down and what their own market position is.
A budget
Before you spend a single penny, you should have a deep think about what resources you’re going to need to get your business up and running.
This can include your equipment, your staffing needs, and the property you might need, as well as materials or other resources. From there, you should put together a budget of how much you’re going to need to get the business up and running.
There are going to be costs that you can’t expect to recover any time soon and to make your business profitable, you might want to look at some ways of cutting some of those costs. However, you do need to know how much you will need, at a minimum, to get your business up and running.
A business plan
The budget that you work out can fit nicely into your business plan, too.
Your business plan is basically a document that outlines how your business is going to run, how it’s going to make its money, where it’s going to spend its money, and how it is going to manage growth in the longer term.
It’s more than just an outline of the workings of the business as you plan it, it can act as your very own guiding light. If you’re ever making a difficult decision in business, it can be a good idea to consult the business plan to see which of your choices better aligns with the goals and objectives as set out in the plan.
What’s more, a business plan is going to play an important role in helping you get your business started in a very practical sense, as we will cover next.
Capital
One of the primary purposes of the business plan, as far as many business owners are concerned, is to help them get the funding that they need. Indeed, if you have completed your budget as recommended above, then you likely have a good idea of exactly how much money you’re going to need.
Some people can bootstrap their business or reinvest the money they’ve made from other businesses or investments, but most are going to need a loan.
If you’re going for a loan from a bank or lending platform, aside from a detailed account of where the money is going to go, you should also have a business plan so that they can see you have legitimate plans on how the money is going help you grow a business.
The business itself (structure)
Of course, you’re going to need to officially start the business and put yourself in the position of ownership as well. Depending on what type of business you start, this process can vary, somewhat.
Registering with the HMRC might be all you need if you plan to start a sole proprietorship, in which you are much more closely linked with your business.
For those that plan to go beyond the stage of being self-employed, however, starting a limited company with limited company formation packages might be more suited to your needs. After all, it can be important to establish your business as a distinct legal identity from yourself.
A business bank account
Regardless of whether or not your business is legally distinct from yourself, you should make sure that it’s financially separate from yourself.
For limited companies or other kinds of business structures, starting a business bank account, separate from any personal accounts of your own, may be mandatory. However, even for sole proprietorships and the like, it’s a good idea to start one anyway.
For one, you don’t want to give yourself the possibility of mixing up the business and personal finances, dipping into one for costs that should be covered by the other.
What’s more, it’s also going to be a lot simpler to manage and file your taxes when you have a bank account that’s dedicated only to the money earned and spent by the business, which is what we’re going to look at, next.
Accounting and tax (register for corporation tax)
Indeed, you should start getting ready for tax season as soon as you start your business. All too often, business owners will leave it right up to the last week or month and have to scramble to get their taxes done on time.
First of all, if you’re running a limited company or other business structures, you should look at whether or not you have to register for corporation tax. If you do, then this has to be done within the first three months of operating your business.
Then, you should get yourself some accounting and tax software that makes it much easier to track your finances throughout the business year and can even help you automate your tax return when tax season comes.
A location
As part of your business formation, you’re going to at least need a location where you can register your address. You don’t necessarily need to own the address, but you do need to have the right to use it for the business, be it your own property, your home, or an address leased to you for professional use.
But you should also think about where you’re actually going to operate and base your business. If your home suits, then there’s nothing wrong with that, it’s a route that many have taken before.
Otherwise, you should be looking at a commercial property, from office spaces to warehouses, and trying to find the space that best suits the needs of your business.
A website
Regardless of where your business is based, there are few (if any) businesses that are not going to benefit massively from having their own website.
Websites play a crucial role in digital marketing, which can help you much better reach your target market. You may already well know this by now, but you should also know how vital it can be to invest in professional website design.
As it is going to be the source of the first impression you leave on many of your potential customers and clients, you should ensure that your website is designed by professionals who know how to turn it into a conversion machine that helps your visitors find precisely what they’re looking for while selling your brand in the best light.
A team (or not)
You may be able to run your business by yourself just fine for the moment, but if you do plan on growing, you’re likely to not be able to handle all of your needs by yourself.
There is, of course, the option of outsourcing and relying on freelancers, but there are drawbacks, such as the fact that employing tends to be more cost-effective if you’re looking for labour to use in the long run.
As such, you should think about what positions in the business you might be looking to fill, what skills and qualifications are necessary for those and, just as importantly, what kind of company culture you want to create and what kind of mindsets you want to attract.
You might not need everything laid out above, but you should at least consider whether or not you need them. Then, you’ll be in a much better position to get your business up and running.
